The provincial government has outlined its financial plan for the coming year, with a budget that doesn't stray from warnings the province has been giving Albertans for several weeks.
Budget 2013 reflected the message the Conservative government has been toeing for months, tightening belts in a number of departments, investing in some areas, but dropping or changing other projects and programs.
The budget also outlines total spending of about $40.6 billion – with an estimated $1.97 billion dollar deficit.
The province estimates to collect about $38.6 billion, including more than $2 billion from the Contingency Account, or Sustainability Fund and $4.3 billion in borrowed money in revenue in the coming year.
That revenue is approximately $5.4 billion lower than expected in the previous budget – as expected, the 'bitumen bubble' resulted in a major hit to provincial resource revenues.
Provincial revenue from bitumen royalties is expected to be $6.3 billion lower than forecast the year before.
For this budget, the province has forecasted the price of West Texas Intermediate (WTI) to be $92.50 per barrel, compared to the estimated price of Alberta bitumen, or Western Canada Select (WCS) at $68.21 per barrel.
Regardless of the financial hit, Albertans will not see any new taxes in the budget, or tax rate increases.
Meanwhile, no money has been set aside for wage increases for any public sector staff, even while the province faces contract negotiations with a number of unions, including teachers and doctors.
The province is adding ten more RCMP officers and two new provincial judges, in addition, changes are also coming to the justice system, the limit for small claims court will be raised, case management offices will continue to be funded by the province along with other steps being taken to reduce caseloads.
A number of other programs are also slated to be changed, suspended or cut altogether.
For example, certain requirements will change for the Alberta Seniors Benefit Program, a move that's meant to save $9 million – but about 6,000 seniors will either lose their benefits, or their benefits will change.
The STEP Program – a student employment program – has been suspended – saving the province $7.4 million.
Budget breakdown and savings plan
The province's budget has been divided into three separate parts, operating, savings and capital.
For the operating budget, the province expects to spend $36.4 billion – a number that only slightly changed from the previous budget – that budget plan is estimated to come in with a $451 million deficit.
The province said that deficit will be offset by a transfer from the Contingency Account – which is part of the Savings Plan.
That plan includes the introduction of Bill 12, the Fiscal Management Act – that will legislate a balanced operational budget going forward, limits on in-year spending increases and puts a cap on infrastructure spending.
While the operational budget is set to run a deficit this year, in the next two budgets the province expects it to run at $1.48 billion, and $3.29 billion.
The legislation also includes a savings plan, set to begin in the 2014-2015 fiscal year – although the province said it will start saving as part of Budget 2013, since Bill 12 allows for accelerated timelines.
Under the legislation, a portion of revenue from non-renewable resources will be set aside for savings in the Contingency Account – which used to be the Sustainability Fund, until it reaches $5 billion – at which point that revenue will be used for other savings.
Despite the upcoming legislation, the account balance has been estimated to drop to $691 million – after it held a balance of about $2.7 billion at the end of the previous year.
The third plan outlined in Budget 2013, called the Capital plan, outlines how the province will spend a $5.2 billion portion of a total $15 billion slated to be spent over three years on infrastructure projects.
In the 2013-2014 budget year, the province expects to spend a borrowed $4.3 billion (with $1.1 billion borrowed in the previous year), on infrastructure projects.
While millions out of a total $15 billion have been slated for construction of provincial highways – including $442 million to twin sections of Highway 63 south of House River to south of Fort McMurray over the next three years – the other major, and dangerous, route into the Fort McMurray area will not see upgrades.
Back in October 2012, more than $300 million was pledged to twin Highway 881. Now, that project has been dropped from the three year plan.
Tories promise new, and upgraded, schools
The budget includes an increase to more than $6.1 billion for operating costs of public and separate school boards – with funding for school capital projects adding up to $1.4 billion over three years.
The project cost includes more than $500 million slated to start the process of meeting Premier Alison Redford's election promise of adding 50 new schools, and modernizing 70 existing ones over six years – an initiative that is expected to add up to a cost of more than $2 billion.
However, no details on the plan were released – they're expected to be made public in the coming weeks.
As for staffing, the province has not allocated any funding for added teachers to teach students at those new schools.
Post-secondary institutions will lose about $147 million to their operating funding – leaving about $2 billion in operating grants.
New facilities planned for NAIT, NorQuest College, the University of Calgary, Lethbridge College and Mount Royal University are included in another $500 million commitment by the government over the next three years.
Health spending increased, slightly
Budget 2013 has allocated $17.1 billion for health – an increase of nearly $500 million, or 3 percent over the year before, in addition to $393 million for operating costs of new facilities.
More than half of that – $10.1 billion – has been set aside for base operating funding for front-line health services, the government is also putting $262 million into Primary Care Networks, Family Care Clinics and addiction and mental health services.
The province is also introducing lower generic drug prices, and is planning to introduce a PharmaCare program, to help the 20 percent of Albertans with no coverage for drugs, along with a new Insulin Pump Therapy program, set to start in the spring.
However, cuts to spending were felt in the Capital Region, after the province confirmed plans for the next phase of the Sherwood Park Hospital are on hold – the first phase has been under construction for six years, and a second phase was to follow.
According to the province, the project isn’t considered to be a priority and is no longer in the province’s three year plan.
While health is receiving more money, Alberta Health Services was hoping for a 4.5 percent increase – and officials said they will be considering a number of recommendations to handle the less-than-expected increase.
On the table going forward is a possible freeze to the growth of the AHS workforce, a review of the senior management structure and a possible 10 percent reduction in overall administration costs.
Opening Alberta bitumen to new markets
In an effort to shrink the 'bitumen bubble' further, the province is also moving forward with plans to open up the resource to other markets other than the United States.
Five million dollars has been budgeted to help strengthen the province's presence in international markets – namely Asia and the US - which would eventually lead to the province earning more revenue from the resource.
Funding maintained for community projects
As for funds allocated to communities, the Municipal Sustainability Initiative (MSI) fund will be maintained at nearly $900 million this fiscal year.
Of that, Edmonton will receive $170 million, while Calgary will get $254 million – the money is allotted based on population, kilometres of roadway, and education property tax amounts.
Mayor Stephen Mandel was holding out hope that the province would include some way to contribute $100 million for the downtown arena.
Mandel told CTV News he’s confident money for the arena would be available – he said he’s had assurances that the government will deal with the issue this year.
Provincial officials, including the Finance Minister and the Premier, have in the past maintained the city could use money from MSI to cover the funding gap.
While money from the province has still not been committed to the city's downtown arena project – the new Royal Alberta Museum project is still moving forward, it's expected to open in 2017.
